Parking meter firm's take from city rises

Hal Dardick, Tribune reporter

City Hall paid $6.5 million during the past year to the company that's leasing Chicago's parking meters — about $500,000 more than Mayor Rahm Emanuel's administration predicted when it renegotiated the deal.

Although there was a higher tab to reimburse Chicago Parking Meters for spaces taken out of service, there was some good news as well. The city could end up paying millions of dollars less each year for free parking provided to disabled people, thanks to a new state law that limits free parking to those who are physically unable to use pay boxes.

That's the upshot of a Tribune review of the most recent reports and data related to the unpopular lease of about 36,000 metered parking spots to the Chicago Parking Meters company. The original deal struck in late 2008 under then-Mayor Richard M. Daley saw the city get $1.1 billion upfront in return for a 75-year lease of Chicago's paid street parking system. Nearly all of the one-time windfall was spent by the time Daley handed over the reins to Emanuel. Meanwhile, the contract required the city to drastically raise rates on behalf of the company.

The documents, obtained through an open records request, and interviews of city officials also indicate that Emanuel's swap of free Sunday neighborhood parking for longer payment hours at most meters could reduce overall costs to city parkers. And the Tribune review found that the city is recovering more of its costs for out-of-service meters from construction and utility companies whose work temporarily puts them offline.

Chicago Corporation Counsel Stephen Patton said the results show that Emanuel's revised contract, which aimed to make a bad deal less onerous while also providing the perks of free Sundays and an option to pay by cellphone, looks like it will be a success over the long haul.

The generous terms negotiated under Daley saw the city paying back the company for removal of meters, changes of hours or rates, and spaces temporarily taken offline for street repairs, utility work and festivals.

Around the time Daley left office, the company started sending invoices to the city, with one year's tab hitting $53 million. The Emanuel administration disputed the bill, the matter went to arbitration and eventually the contract was renegotiated.

Patton, the city's top lawyer, contends that without the tweaks made to the contract, the city would have ended up paying tens of millions of dollars more than the $6.5 million it shelled out during the past year for meter system changes. And those higher payments could have been due in each of the 70 remaining years of the lease — which Patton valued at more than $1 billion to the city, using the current value of a dollar.

"We got out of this huge liability, and we are reaping the benefits, and we will be every year," said Patton, referring to the contract changes the City Council approved in June 2013. But Patton also conceded that the best the city could do was soften the blow.

"We couldn't start from scratch," Patton said. "We inherited a contract. We took the existing contract and turned it into something much better for the city and the taxpayers."

But Ald. Scott Waguespack, an opponent of the original deal and the revised version, said it was never clear that the city owed as much as the parking meter company claimed. The 32nd Ward alderman contended that the company severely overbilled the city, and Emanuel's administration was simply doing its job by negotiating the bills downward.

The most recent bills for meter changes are "probably what it should have been all along," the alderman said. "The numbers were always going down, once the city figured out how to work through the invoices, and do what they did, which was challenge them."

And Waguespack said it's too early to evaluate the overall deal. "I think you need two or three years of data before you can declare victory on it," he said.

For the 12-month period ending Feb. 28, the city paid the company about $6.5 million for out-of-service meters, an amount Patton now says will be the average annual tab for last 71 years of the contract. That would cost the city a total of $242 million, based on the current value of a dollar, according to a Tribune analysis.

But the city is working to reduce those annual costs. Last year it collected $2.6 million from utility and construction companies that temporarily put meters out of service, an increase of about $400,000 from the previous year, Patton said.

The city also is expected to bring in about $1 million a year from the restoration of paid Sunday parking in neighborhoods where aldermen said the "day of (parking meter) rest," touted by Emanuel as a key selling point of the revised deal, was hurting businesses with limited parking options. That money would be used to offset the out-of-service fees the city has to pay the parking meter firm.

In addition, the city is doing better under the new state law on disabled parking. The parking meter company calculated $3.1 million worth of free disabled parking in the quarter ending Feb. 28, compared with $7.2 million the previous quarter. The city only started enforcing the new disabled parking rules on Jan. 16.

If the reduction in free disabled parking was not the result of a particularly harsh winter — and the parkers don't find ways to scam the new system, as they did the old one — the city would end up paying far less for disabled parking or even nothing at all in the future, Patton said.

"That's got to be helping immensely," Waguespack said of the new state law. "I think our biggest losses were around that handicapped issue. A lot of people still complain about it, saying that that's not a fair way to treat people that need those handicapped spots, but I think they did a pretty good job proving who needed them and who didn't."

Even if the city cuts its disabled parking costs to $5 million a year — a more than 75 percent reduction from the $21 million it paid in the year ending Feb. 28, 2013 — taxpayers still would have to fork over $216 million, based on the current value of a dollar, to the parking company over the remainder of the lease.

Patton also cites a city-commissioned assessment that looked at the first six months of the deal and concluded that parkers are getting the better end of the swap of free Sunday parking for longer hours during the week. The swap could save parkers $2.1 million a year, the assessment concluded.

Waguespack also questioned whether those savings to parkers would hold up under further scrutiny. "I'm always skeptical of these stats, where they throw something out, and they pick small time frames, and say, 'This shows that we've got a victory here,'" Waguespack said.

Though parking meter rates increased by as much as 75 cents in 2013, the meter company took in about $3.9 million less than in 2012. That could reflect the city reducing the amount it owed for out-of-service meters. Still, the parking company collected $130.6 million in revenue during 2013, according to its audited financial statement provided to the city. Net income, before paying down debt, was about $78 million.

What's still totally unknown under the new deal is how the parking meter company will fare with a pay-by-phone system that was fully in place for the first time last Saturday. The revised contract allows the company to profit by up to $2 million a year from transaction fees and interest on pay-by-phone accounts. The city would get any pay-by-cell profits above $2 million, a bit of a silver lining for taxpayers resentful that the money they pay to park no longer goes into city coffers.